Electric consumers to finance discount for V&M Star Steel

By Don Shilling

Also, Youngstown council Wednesday OK’d changes to its deal to buy land for the expansion.

YOUNGSTOWN — Electricity users across northern Ohio will be charged extra so V&M Star Steel can receive discounted electricity at its proposed plant expansion.

The Public Utilities Commission of Ohio on Wednesday approved discount electric rates for the proposed new plant along the Youngstown-Girard border. PUCO also ruled that Ohio Edison can recover money to cover its discount from other customers.

The extra charge would apply to all customers, both residential and commercial, of Ohio Edison as well as Cleveland Illuminating Co. and Toledo Edison. The three companies are subsidiaries of Akron-based FirstEnergy Corp.

Shana Eiselstein, a commission spokeswoman, said this is the first use of a state law passed last year that allows utilities to recover the expense of providing discounted electricity rates.

The commission said it will consider requests for such recoveries based on the benefits provided by each project.

In the past, such recoveries were automatically built into customers’ rates when utilities filed rate cases with the state. That system was changed when the state deregulated the electricity industry, Eiselstein said.

In the V&M case, details of how electricity users will be charged and whether a line item will appear on bills will not be known until Ohio Edison files an application for the recovery fee, Eiselstein said. The length of the recovery also isn’t known, she added.

The rate discount isn’t being released. The PUCO approved placing the amount under seal because V&M requested that it be considered a trade secret.

The commission noted that V&M Star, which produces pipe mainly for oil and gas exploration, will consider energy-efficiency measures, including using heat energy to produce electricity and improving the efficiency of electric furnaces and the compressed-air system.

The PUCO said the expansion is to create 250 to 300 jobs and will cost $835 million. Youngstown officials have said the project will cost $970 million and create more than 400 jobs.

Also Wednesday, Youngstown City Council approved legislation related to the purchase of land needed for the proposed expansion.

Based on discussions with V&M officials about the land, council agreed to amend an ordinance authorizing the city’s board of control to buy property needed by the company for an expansion near its location on Martin Luther King Jr. Boulevard.

V&M no longer wants 8 acres of the former Sharp Lumber property at a cost of up to $340,000.

Instead, the company wants about 12.5 acres owned by Shelly & Sands at a cost of up to $400,000 and about 10 acres owned by the Norfolk Southern railroad company at a cost of up to $340,000, said city Finance Director David Bozanich.

“It provides more acreage” and is a better fit for V&M, Bozanich said.

Council authorized the board of control on Feb. 9 to spend up to $5 million to purchase 103 acres of property for the V&M proposed expansion and to sign a deal with the company to reimburse the city for those costs.

The board hasn’t purchased the property as V&M negotiates the relocation of a Norfolk Southern railroad line needed for the expansion.

Negotiations to purchase about 30 to 40 acres from the railroad company are ongoing, Bozanich said.

The city has estimated it would cost about $20 million for V&M to buy the property and relocate the railroad line, the latter being the more significant expense.

“It’s a good sign,” Bozanich said about the railroad company’s willingness to sell the 10 acres in relation to the more expensive 30- to 40-acre purchase.

The decision by V&M to buy different property surrounding its Youngstown plant would reduce the amount of additional railroad property and that purchase’s price, Mayor Jay Williams said.

While the mayor said he wasn’t told how much of a reduction it would be, Williams added that “significant was the term I heard.”

Several messages left by The Vindicator with V&M in recent weeks to discuss this project haven’t been returned.